2009 Interim Results

Transcription

1 2009 Interim Results

2 Forward-Looking Statement Disclaimer This presentation and subsequent discussions may contain forward-looking statements that involve risks and uncertainties. These statements are generally indicated by the use of forwardlooking terminology such as believe, expect, anticipate, estimate, plan, project, target, may, will or may be expressed to be results of actions that may or are expected to occur in the future. You should not place undue reliance on these forward-looking statements, which reflect our belief only as of the date of this presentation. These forward-looking statements are based on our own information and on information from other sources we believe to be reliable. Our actual results may be materially less favorable than those expressed or implied by these forward-looking statements which could depress the market price of our Level 1 ADSs and local shares. 1

3 Management Team Mr. Gary He Mr. David Lam Mr. Yingxin Gao Mr. Chengwen Zhuo Mr. Alex Cheung Mr. David Wong Vice Chairman & Chief Executive Deputy Chief Executive Executive Director & Deputy Chief Executive Chief Financial Officer Chief Risk Officer Deputy Chief Executive 2

4 Agenda Key Performance Highlights Financial Results Outlook 3

5 Key Performance Highlights

6 1H09 Operating Environment Overall operating environment remained challenging Impact of financial crisis appeared subsiding, especially into 2Q09 Stabilizing economic environment boosted rebound in local stock and property markets 5

7 Performance Overview Maintained strong financial position on the back of our effective measures Captured business opportunities and further enhanced our franchise by leveraging our core strengths Good balance between risk management and business growth 6

8 Strong Financial Position Well Capitalized Tier 1 Tier % 16.10% Highly Liquid Liquidity remained solid at 39.70% 5.31% 4.86% 10.86% 11.24% 42.47% 39.70% Dec 2008 Jun 2009 Solid Loan Quality Classified or impaired loan ratio -9 bps to 0.37% 1H H 2009 Disciplined Cost Control Core operating expenses* down 2.8% YoY HK$m 0.46% 0.37% 4,088 3,914 3,972 Dec 2008 Jun H H H 2009 * Excluding expenses mainly related to the Lehman Brothers Minibonds 7

9 Key Financial Highlights HK$m 1H2009 2H2008 1H2008 Change YoY YoY Change HoH HoH Net operating income before impairment allowances 13,028 11,487 14, % 13.4% Operating profit before impairment allowances 8,834 6,804 9, % 29.8% Profit attributable to shareholders 6,691-3,745 7, % --- Earnings per share (HK$) % --- Dividend per share (HK$) % --- ROE 15.13% -8.43% 15.09% 0.04pp 23.56pp ROE before impairment allowances 19.98% 15.31% 21.18% 1.20pp 4.67pp ROA 1.23% -0.75% 1.32% 0.09pp 1.98pp ROA before impairment allowances 1.58% 1.23% 1.83% 0.25pp 0.35pp YoY decline in operating income was mainly due to lower net interest income amidst pressure from low market interest rates Profit attributable to shareholders saw moderate decline as helped by lower impairment allowances on securities investments Improving trend compared to 2H 2008, especially in 2Q

10 Solid Core Performance Captured business opportunities in a tough market leveraging our core strengths Solid Loan Growth Loans grew 3.3% amidst weak market demand Corporate loans for use in HK achieved an impressive growth of 13% Strong Deposit Base Strong deposit franchise with 1.6% growth in total customer deposits Deposit mix further improved on the back of our proactive strategy to control funding costs Fees Income Stable net fee income YoY despite slower business activities in the market Key growth drivers included stock brokerage, loans and credit card commissions Improved trend in 2Q09 in most areas compared to 1Q09 9

11 Strong Franchise Personal Banking Strong deposit franchise and distribution network Leading position in residential mortgages & retail stock brokerage business Solid market position in credit card business with wide industry and customer recognition Corporate Banking Loan syndication : successful expansion of syndicated loan businesses in the Asia-Pacific region Total Solution Services : continued progress in enhancing our service and product scope (e.g. cash management, custody, cross-border services) SMEs : SME s Best Partner Award 2009 Best Choice for RMB services No. 1 in local RMB deposits-taking business The only RMB Clearing Bank in Hong Kong Unique edges in RMB trade settlement and finance business 10

12 Financial Results

13 Condensed Income Statement Both operating income and bottom-line performance improved significantly from 2H08 HK$ m 1H2009 2H2008 1H2008 % YoY % HoH Net interest income 8,929 10,128 10, Net fees and commission income 2,947 2,280 2, Other operating income 1,152 (921) 1, Net operating income before impairment allowances 13,028 11,487 14, Net (charge)/reversal of impairment allowances (1,115) (10,346) (2,227) Net operating income 11,913 1,141 11, Operating expenses (4,194) (4,683) (4,088) Operating profit 7,719 (3,542) 7, Non-operating items 525 (814) Profit attributable to shareholders 6,691 (3,745) 7,

14 Net Interest Income Net interest income declined mainly due to lower NIM HK$ m 1H2009 2H2008 1H2008 % YoY % HoH Interest income 11,993 17,176 18, Interest expense 3,064 7,048 8, Net interest income 8,929 10,128 10, Average interest earning assets 1,023,452 1,024, , Net interest margin (NIM) 1.76% 1.97% 2.03% 0.27pp 0.21pp 13

15 Net Fees and Commission Income Moderate YoY growth in income despite slowdown in business activities Strong growth in stock brokerage and loans commissions HK$ m 1H2009 2H2008 1H2008 % YoY % HoH Investment and insurance fee income Securities brokerage (Stockbroking) 1,625 1,091 1, Securities brokerage (Bonds) Funds distribution Life insurance ,741 1,221 1, Traditional banking businesses Bills commissions Loan commissions Trust services Payment services Credit cards Account services Currency exchange IPO-related Others ,143 2,148 2, Total Fees and Commission Income 3,884 3,369 3, Less: Fees and Commission Expenses (937) (1,089) (946) Net Fees and Commission Income 2,947 2,280 2,

16 Non-interest Income Non-interest income improved mainly due to lower operating loss of BOC Life HK$ m 1H2009 2H2008 1H2008 % YoY % HoH Net fees and commission income 2,947 2,280 2, Other operating income - Banking operation 1, , Net trading income , Net gain/(loss) on financial instruments designated at FVTPL 180 (224) (92) Other income BOCL # non-interest income (228) (1,452) (485) Net gain/(loss) on financial instruments designated at FVTPL - BOCL # (1,575) 1,256 (1,392) Net insurance premium income 2,261 1,390 4, Net insurance benefits and claims (919) (4,107) (3,602) Other income Total 4,099 1,359 4, # BOCL= BOC Group Life Assurance Company Limited 15

17 Operating Expenses Core operating expenses* well contained on the back of disciplined cost control measures Operating Expenses Number of Branches HK$ m 4,683 4,088 4,194 (286) (280) , Others Depreciation Premises and Equipment End-Dec 2008 End-Jun 2009 ( ) - Branches in Hong Kong 2,482 2,072 2,256 Staff Costs Staff Number 1H2008 2H2008 1H ,463 13, % 40.77% 32.19% Cost-to-income ratio End-Dec 2008 End-Jun 2009 *Excluding expenses mainly related to the Lehman Brothers Minibonds 16

18 Net (charge) / reversal of Impairment Allowances Net reversal of loan impairment allowances as release increased Lower securities investments provisions as capital markets stabilized HK$ m Advances to customers 1H2009 2H2008 1H2008 % YoY % HoH Individual assessment - New allowances (163) (671) (142) Releases Recoveries Collective assessment - New allowances (198) (492) (199) Releases Recoveries Net (charge)/release of impairment on advances 60 (590) (71) Securities Investments US non-agency RMBS (1,212) (6,104) (2,149) Other debt securities 44 (917) Investment in BEA 0 (2,730) Net charge of impairment on securities investments (1,168) (9,751) (2,149) Others (7) (5) (7) Total (charge)/release to income statement (1,115) (10,346) (2,227)

19 Loan Quality Classified or impaired loan ratio fell to 0.37% Classified or Impaired Loan Ratio Migration of Classified Loans % HK$ bn End-Dec 08 End-Jun 09 End-2008 Downgrade Upgrade Collection Write-off End-June

20 Condensed Balance Sheet Maintained prudent approach in balance sheet management HK$ m % Change Total assets 1,146,150 1,147, Cash and balances with banks and other financial institutions 113, , Placements with banks and other financial institutions 111,655 89, Securities investments 329, , Advances and other accounts 485, , Fixed assets & IP 32,087 30, Total liabilities 1,050,184 1,062, Inter-bank deposits taken 77,116 88, Deposits from customers* 824, , Subordinated liabilities 27,339 27, Total equity 95,966 84, Minority interests 1,817 1, Shareholders funds 94,149 82, * Including structured deposits 19

21 Advances to Customers Loan growth outperformed market driven by strong growth in corporate loans for use in HK HK$ m % Change Loans for use in HK - corporate 213, , Loans for use in HK - individual 147, , Residential mortgages* 118, , Credit card advances 6,492 6, Trade finance 25,052 24, Loans for use outside HK 89,240 99, Total advances to customers 475, , Loan-to-deposit ratio 57.66% 56.74% *Loans for purchase of residential properties other than flats in Home Ownership Scheme, Private Sector Participation Scheme and Tenants Purchase Scheme 20

22 Customer Deposits Recorded moderate deposit growth with further improvement in mix HK$ m % Change Demand deposits and current accounts 59,520 46, Saving deposits 450, , Time, call and notice deposits 311, , Structured deposits 3,767 8, Total deposits from customers 824, ,

23 Securities Investments Maintained prudent investment strategy Continued reduction in US RMBS exposure HK$ m % Change Debt securities by by credit rating Sovereign 73,057 84, Public Sector 23,286 23, Corporate entities 35,496 44, Banks and other FIs 197, , % 5% 2% 25% Total 329, , US non-agency RMBS Subprime 812 1, Alt-A 1,709 2, Prime 12,339 15, Total 14,860 19, As % of total investments 4.5% 5.8% 49% Aaa Aa1 to Aa3 A1 to A3 Lower than A3 Unrated Note: Including issuer rating distribution for issues with no issue rating 22

24 Segmental Performance 5,067 (-13.6%) 2,218 Operating income HK$ m ( % YoY) 3,841 (-6.4%) 3,746 (-14.7%) 1, ,184 (26%) Pre-tax profit HK$ m ( % of total) 909 (11%) 2,216 (27%) 2,849 2,644 2,914 2,935 (36%) Personal Corporate Treasury Net interest income Other operating income Personal Corporate Treasury Others Operating performance of the 3 segments was all adversely affected ed by decrease in net interest income amidst a low interest rate environment Good progress in enhancing our business platform in a number of areas 23

25 Mainland Business HK$ m Enhanced Mainland platform through network expansion and consolidation 1H2009 1H2008 % YoY Operating income Operating expenses Operating profit before impairment Profit before taxation Remark: Higher profits YoY mainly due to lower exchange loss of capital funds recorded in 1H09 Deposits from customers Gross advances to customers HK$ m +6.3% YTD HK$ m -9.9% YTD 12,667 9,947 10,576 35,140 31,659 28,509 End-Jun 2008 End-Dec 2008 End-Jun 2009 End-Jun 2008 End-Dec 2008 End-Jun % 0.88% 0.48% Classified loan ratio 24

26 Outlook

27 Outlook and Strategy Solid financial strength provides flexibility to grasp business opportunities despite market uncertainties Remain focused on fortifying our financial strengths and risk management Grow on our core strengths and enhance our franchise Enhanced business capabilities to better serve our customers (e.g. BOC Life, Total Solution Services) Considerable growth opportunities ahead Strong BOC BOCHK collaboration platform Well positioned to capture rising opportunities from expanding scope of RMB businesses in HK 26

28 2009 Interim Results